At the outset of our analysis, we find that there are clear factors that explain the stability of oil prices despite prevailing tensions.
These include the current risk premium added to the prices, China’s substantial stockpiling of around 900 million barrels and the presence of approximately 120 million barrels of floating oil that can be swiftly introduced into the market.
These elements largely account for why we haven’t seen a more dramatic increase in prices.
In addition to these factors, it is important to note that despite the ongoing issues and concerns surrounding the passage of ships through the Strait of Hormuz with a significant risk of disruptions to oil and gas tanker traffic, which would typically warrant higher prices those prices have not risen significantly.
Moreover, another critical factor that must be highlighted is the direct targeting of Gulf oil-producing countries, which adds yet another layer of upward pressure on prices beyond current expectations.
By adding these points, we underscore the complexity of the market situation and the multiple layers influencing price stability, factors that are essential to consider when assessing why prices have not risen more dramatically.
And after all this analysis, the question remains: are there hidden hands at play in the oil markets that have prevented prices from rising higher than they currently are?
This is an important question that adds another layer to the discussion, suggesting that unseen dynamics may be shaping the market in ways that defy traditional expectations.
ALI AL RIYAMI
The writer is an independent energy analyst
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